There Is A Huge Difference In Invoice Factoring Companies.

Here's How To Select The Best One For Your Business.

You might think that all invoice factoring companies do the same thing- give you cash for your invoices. Well, that's true, but some companies actually go above and beyond to give you first class service.

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Maryland Factoring Company

New to Factoring?

For those who aren't familiar with factoring, it is basically a fast way to get cash to run your business.

Factoring is Not a Loan

When you send your customers an invoice, they usually have 30 days to pay you back. Factoring companies will give you the bulk of the cash up front, sometimes within 24 hours, and collect the payments from your customers themselves. Once the invoices are paid in full, you’ll get the balance left over, minus a small fee.

Factoring Doesn't Require Debt

So how do you go about choosing the best factoring company?

Not all of them are created equal. Not all of them will give you the same level of service you need to help grow your business.

Everyone claims they have the simplest rate structure in the industry, no long-term contracts, same day funding, no up-front fees, no monthly minimums or maximums, etc., etc., etc.

We also offer these same benefits, but we GO THE EXTRA MILE FOR YOU that other factoring companies don’t.

Here’s Why We Are The Factoring Company You Need For Your Maryland Business

No other factoring company matches our level of superior service and offerings.

Financially Strong

We have been in business since 1979, are privately held, and have a proven track record of being financially strong. We have survived many economic downturns and in doing so, can help you through any difficult times you might encounter. We won’t go out of business when the times get tough, like some other factoring companies regretfully have in the past.

Part of a Vast Network

Every factoring company has a preference for size, industry, and risk. It’s impossible for you to know which company is the best fit for you. By contacting us, we can save you a tremendous amount of time by helping you find the best match for your business - whether it’s with us or another company.

We have a vast network of industry colleagues that we’ve built over 20+ years in the business. So, when you take the time to explain your needs to us, we can be the “one stop shop” to help you find exactly what you’re looking for.

No Minimum

Most factoring companies will allow you to pick & choose customers to factor, however they usually have a minimum amount before they’ll work with you. With us, you can pick & choose what to factor on an invoice by invoice basis with no minimum.

Our factoring agreement is like carrying a credit card in your pocket. You carry it to use when you need it but don’t sign an agreement which will force you into factoring when you don’t need it.

Transparent Fees

Most factoring companies are not upfront about their fees. We are different. We are totally transparent about our fees. When you apply, you are provided a transparent, no obligation rate proposal with the fee for your company.

Our typical contract term is 90 days and we offer price breaks for extended term contracts as well as volume discounts. Optional services include $7/ACH for next-day funds sent electronically to your bank account or $12/wire for same-day funds. Invoices can be scanned and electronically uploaded directly to our secure server for $9/batch. In instances when original invoices are required, we offer discounted rates with Federal Express to submit your invoices.

That’s it! See which other factoring company, if any, will be totally up front with their fees before they try and get your business.

Higher Advance Rates

An “advance” rate is the percent of the invoice face value that you’ll receive upfront. Industry average advance rates are 70-90% of the face value of the invoice. So, for example, if your customer owes you $1,000, you should expect to receive an advance payment of $700 to $900 to your account. Our typical advance rates are higher than average - at 85-97% depending on industry and payment track record.

Personalized Solutions

We are not beholden to Wall Street investor money. We are a privately held company and don’t answer to investors or boards. We are like-minded entrepreneurs who understand what it takes to run a business. We take the time to hear your story, learn your struggles, and put together a solution for you rather than relying on an algorithm to determine your company’s value. Who do you want to rely on as a cash flow partner to fund your business?

Dedicated Account Administrators

Many factoring companies have either a lot of employee turnover, a complex voice mail system that you get lost in or operate call centers where you talk with a new representative every time you call in. We offer dedicated account administrators to be your point of contact – who knows your business intimately, and can help you in ways others just can’t.

Industry Veterans

We have been in business since 1979 and have staff who are dedicated to working in this industry as a career. We are veterans in this industry and can provide additional business guidance and resources as needed.

Our Business is Your Business

We establish a mutual risk tolerance to avoid putting you in the position to ever have to buy back an invoice. We also keep track of each invoice and follow them like your own credit and collections department would. Once they hit the payment date we place friendly reminder calls and/or emails on your behalf and keep notes as to when it is scheduled to be paid, and send copies if needed until payment is received.

Payment Trend Alerts

You will have access to online aging reports and your dedicated account administrator is kept in the loop and given advance notice of any collection issues so there are no surprises.

Up-to-Date Customer Credit History

You get direct online access to your customer’s business credit reports, or you can call and speak with your account administrator – your choice. Stay ahead of negative payment trends. This is critical to running your business and filling your next order.

Leading Edge Technology

We make strides to incorporate the latest technology to expedite the funding process, such as electronic submission of invoices, online reports, online credit checking and other emerging methods to streamline the process and reduce overhead, which means lower rates for you. Most other companies don’t even come close.

Financially Strong

We have been in business since 1979, are privately held, and have a proven track record of being financially strong. We have survived many economic downturns and in doing so, can help you through any difficult times you might encounter. We won’t go out of business when the times get tough, like some other factoring companies regretfully have in the past.

Part of a Vast Network

Every factoring company has a preference for size, industry, and risk. It’s impossible for you to know which company is the best fit for you. By contacting us, we can save you a tremendous amount of time by helping you find the best match for your business - whether it’s with us or another company.

We have a vast network of industry colleagues that we’ve built over 20+ years in the business. So, when you take the time to explain your needs to us, we can be the “one stop shop” to help you find exactly what you’re looking for.

No Minimum

Most factoring companies will allow you to pick & choose customers to factor, however they usually have a minimum amount before they’ll work with you. With us, you can pick & choose what to factor on an invoice by invoice basis with no minimum.

Our factoring agreement is like carrying a credit card in your pocket. You carry it to use when you need it but don’t sign an agreement which will force you into factoring when you don’t need it.

Transparent Fees

Most factoring companies are not upfront about their fees. We are different. We are totally transparent about our fees. When you apply, you are provided a transparent, no obligation rate proposal with the fee for your company.

Our typical contract term is 90 days and we offer price breaks for extended term contracts as well as volume discounts. Optional services include $7/ACH for next-day funds sent electronically to your bank account or $12/wire for same-day funds. Invoices can be scanned and electronically uploaded directly to our secure server for $9/batch. In instances when original invoices are required, we offer discounted rates with Federal Express to submit your invoices.

That’s it! See which other factoring company, if any, will be totally up front with their fees before they try and get your business.

Higher Advance Rates

An “advance” rate is the percent of the invoice face value that you’ll receive upfront. Industry average advance rates are 70-90% of the face value of the invoice. So, for example, if your customer owes you $1,000, you should expect to receive an advance payment of $700 to $900 to your account. Our typical advance rates are higher than average - at 85-97% depending on industry and payment track record.

Personalized Solutions

We are not beholden to Wall Street investor money. We are a privately held company and don’t answer to investors or boards. We are like-minded entrepreneurs who understand what it takes to run a business. We take the time to hear your story, learn your struggles, and put together a solution for you rather than relying on an algorithm to determine your company’s value. Who do you want to rely on as a cash flow partner to fund your business?

Dedicated Account Administrators

Many factoring companies have either a lot of employee turnover, a complex voice mail system that you get lost in or operate call centers where you talk with a new representative every time you call in. We offer dedicated account administrators to be your point of contact – who knows your business intimately, and can help you in ways others just can’t.

Industry Veterans

We have been in business since 1979 and have staff who are dedicated to working in this industry as a career. We are veterans in this industry and can provide additional business guidance and resources as needed.

Our Business is Your Business

We establish a mutual risk tolerance to avoid putting you in the position to ever have to buy back an invoice. We also keep track of each invoice and follow them like your own credit and collections department would. Once they hit the payment date we place friendly reminder calls and/or emails on your behalf and keep notes as to when it is scheduled to be paid, and send copies if needed until payment is received.

Payment Trend Alerts

You will have access to online aging reports and your dedicated account administrator is kept in the loop and given advance notice of any collection issues so there are no surprises.

Up-to-Date Customer Credit History

You get direct online access to your customer’s business credit reports, or you can call and speak with your account administrator – your choice. Stay ahead of negative payment trends. This is critical to running your business and filling your next order.

Leading Edge Technology

We make strides to incorporate the latest technology to expedite the funding process, such as electronic submission of invoices, online reports, online credit checking and other emerging methods to streamline the process and reduce overhead, which means lower rates for you. Most other companies don’t even come close.

As you can see, we simply have more to offer you.

Other factoring companies don’t even compare.

And Not All Factoring Companies Can Say This:

More than half of our new business comes through client referrals.

So, Can Your Maryland Company Use Factoring?

Of Course! Companies of all sizes, from small privately-owned companies to large multi-national corporations, use factoring as a way to increase their cash flow. Factoring spans all industries, including trucking, transportation, manufacturing and distribution, textiles, oil and gas, staffing agencies and more.

Companies use the cash generated from factoring to pay for inventory, buy new equipment, add employees, expand operations—basically any expenses related to their business. Factoring allows a company to make quicker decisions and expand at a faster pace.

Unlike a bank loan, factoring has…

No principle or interest to pay over time

No debt to repay

Unlimited funding potential – no caps

Fast funding – no waiting months like at a bank

Approval is based on the strength of your clients, not your credit

Startups are welcome in using funding services

Some of the benefits you receive with factoring are:

Stop worrying about cash flow issues and start spending more time on your business.

No need to make monthly payments to repay a loan.

Receive money in as soon as two to four days – or sooner.

Reduce business costs associated with the collection process.

Win the battle against slow-paying clients.

Get instant credit evaluations for new customers.

Have complete control over your cash flow by deciding which invoices to sell and when.

Enjoy bulk-purchasing discounts or early payment discounts by having extra cash.

Improve your credit rating by having cash on hand to pay bills on time.

You get complete and detailed reports about your accounts receivable portfolio.

Provides cash for your expansion.

Provides cash for your marketing.

Improves your overall financial statement.

Stop worrying about cash flow issues and start spending more time on your business.

No need to make monthly payments to repay a loan.

Receive money in as soon as two to four days – or sooner.

Reduce business costs associated with the collection process.

Win the battle against slow-paying clients.

Get instant credit evaluations for new customers.

Have complete control over your cash flow by deciding which invoices to sell and when.

Enjoy bulk-purchasing discounts or early payment discounts by having extra cash.

Improve your credit rating by having cash on hand to pay bills on time.

You get complete and detailed reports about your accounts receivable portfolio.

Provides cash for your expansion.

Provides cash for your marketing.

Improves your overall financial statement.

There it is.

Everything you ever wanted to know about invoice factoring. So what I want you to do now is to pick up the phone and call us. We're waiting to give you money! Call Us Now! We Will Fund You Fast!

Call us today and let us help you get the cash you need to operate your Maryland business effectively.

Baltimore is the largest city in the U.S. state of Maryland and the 26th most populous city in the country. It is located in the central area of the state along the tidal portion of the Patapsco River, an arm of the Chesapeake Bay. The independent city is often referred to as Baltimore City to distinguish it from surrounding Baltimore County. Founded in 1729, Baltimore is the second largest seaport in the Mid Atlantic United States and is situated closer to Midwestern markets than any other major seaport on the East Coast. Baltimore's Inner Harbor was once the second leading port of entry for immigrants to the United States and a major manufacturing center.

After a decline in major manufacturing, industrialization and rail transportation, Baltimore shifted to a service oriented economy, with the Johns Hopkins Hospital (founded 1889), and Johns Hopkins University (founded 1876), now serving as the city's top two employers.With a population of 621,342 as of July 1, 2012, Baltimore increased by 1,100 residents over the previous year, ending over six decades of population loss since its peak in 1950. The Baltimore Metropolitan Area has grown steadily to approximately 2.7 million residents in 2010; the 20th largest in the country. Baltimore is also a principal city in the larger Baltimore Washington metropolitan area of approximately 8.4 million residentsOnce a predominantly industrial town, with an economic base focused on steel processing, shipping, auto manufacturing, and transportation, the city experienced deindustrialization which cost residents tens of thousands of low skill, high wage jobs.

The city now relies on a low wage service economy, which accounts for 90% of jobs in the city.Around the turn of the century, Baltimore was the leading US manufacturer of rye whiskey and straw hats. It also led in refining of crude oil, brought to the city by pipeline from Pennsylvania.Baltimore's unemployment rate in July 2012 was 11%, and the 2012 closure of a major steel plant at Sparrows Point is expected to have a further impact on employment and the local economy. One quarter of Baltimore residents (and 37% of Baltimore children) live in poverty.The city is home to the Hospital.

Information for the state of Maryland

Maryland's economic activity is strongly concentrated in the tertiary service sector, and this sector, in turn, is strongly influenced by location. One major service activity is transportation, centered on the Port of Baltimore and its related rail and trucking access. The port ranked 17th in the U.S. by tonnage in 2008. Although the port handles a wide variety of products, the most typical imports are raw materials and bulk commodities, such as iron ore, petroleum, sugar, and fertilizers, often distributed to the relatively close manufacturing centers of the inland Midwest via good overland transportation.

The port also receives several different brands of imported motor vehicles and is the number two auto port in the U.S. A second service activity takes advantage of the close location of the center of government in Washington, D.C. and emphasizes technical and administrative tasks for the defense/aerospace industry and bio-research laboratories, as well as staffing of satellite government headquarters in the suburban or exurban Baltimore/Washington area. In addition, a number of educational and medical research institutions are located in the state. In fact, the various components of The Johns Hopkins University and its medical research facilities are now the largest single employer in the Baltimore area. Altogether, white collar technical and administrative workers comprise 25 percent of Maryland's labor force, attributable in part to nearby Maryland being a part of the Washington Metro Area where the federal government office employment is relatively high. Maryland has a large food-production sector.

A large component of this is commercial fishing, centered in the Chesapeake Bay, but also including activity off the short Atlantic seacoast. The largest catches by species are the blue crab, oysters, striped bass, and menhaden. The Bay also has overwintering waterfowl in its wildlife refuges. The waterfowl support a tourism sector of sportsmen. Manufacturing, while large in dollar value, is highly diversified with no sub-sector contributing over 20 percent of the total. Typical forms of manufacturing include electronics, computer equipment, and chemicals.

If you need capital right now or are looking to expand then factoring is the way to go.

HOW I MADE A FORTUNE WITH FACTORING

Maryland Factoring Company Articles

Factoring in the Future of a Trucking Business: A Story

John Thompson let the phone ring on his desk. He let his morning coffee cool and left his cigarette to ash itself in the tray, because he is trying to make the biggest decision ever for his trucking company. Thompson Trucking Company was at a turning point of growth and John had to decide if signing with a factoring company was the right way forward.

John's father had started as an owner-operator and had grown Thompson Trucking Company into a fifteen trailer fleet over forty years. There had been some hard times when it seemed everything was going to go under and even John's mother strapped herself into a cab to make hauls. His father had lived long enough to witness the price of hires drop during the recession and watch the eruption of fuel prices afterwards. Now the company was solely in John's hands and he wanted to live to see it in better shape for his sons.

To move Thompson Trucking Company ahead into the future, he needed a steady cash flow but there was just not enough money to go around. His employees needed to be paid. They had families and household bills too. Some of the refrigerated trailers were in need of repairs and he felt to stay competitive it was also a good idea to invest in specialized haulers to be ready for the constant requests he was getting for loads of new energy and agriculture equipment. Every time he had to turn down a request, Thompson Trucking looked weak in a very strong market.

His father would have told him to wait and to take his time adding on new technology. John allowed himself a good hard chuckle. His father had been against placing GPS units in the cabs. He would say, "Why do you need the voice of some woman to tell you to get off at an exit that has been the same exit that has been there for years?" Also his father had the habit of teasing all the drivers he caught switching into automatic even though driving in automatic was much more efficient though not manly in his father's eyes. His father days were long gone and technology was actually an important improvement for the business such as having Qualcomm to cut down on fruitless time communicating on the phone for bills of lading.

John believed a successful man is always thinking of his next step. What would be the next step for Thompson Trucking? And how would he be able to afford it? Funding was all tied up in the mortgage for the office and garage and in the fuel bills. He just finished paying off the small bank loan for installing satellite radio in the trucks for the guys.

But was factoring the answer? There was a lot he didn't understand about the process. It sounded a lot like ninth grade algebra which just didn't feel like it belonged as part of the trucking business. Factoring companies buy your invoices and manage your accounts receivable for a certain percentage of the invoiced amount. The factoring company gives the trucking business its payment right away which allows the business to have continuous cash flow so it can pay employees, buy fuel, and make repairs for upcoming hauls. Without the assistance of factoring, you have to wait for customers to send you the payment which is often 30 days late. In those 30 days, a trucking company can't pay its bills and employees in invoices.

Now it was time for John to do his homework. John had heard that there were companies that charged for same day money transfers and would only advance a percentage of the money owed to your company while holding the rest in a private account if they didn't get their bill payment within 60 or so days. Plus it was worse still if the customer didn't pay up at all because then the factoring company would take it right out of the money supposed to be coming to you! Through the grapevine, he'd also heard about how some companies suddenly slipped you onto a sliding scale of percentages even if you had already signed a lengthy contract for maybe 3% or 7% so there you are with 10% coming as a cost to you out of the freight bill. His friend Ronnie who had a trucking business in Missouri, was run nearly into the ground by a factoring company that charged him the full freight bill on top of the factoring fees. Well, what was the point of going to a factoring company if there was shady business like that going on?

But it turned out to be quite easy. All the factoring companies he researched were open about their business practices and very friendly on the phone when he called. Their customer service actually knew things about their company and spoke in nice clear English so he could understand what was being explained. He didn't mind signing an exclusive contract. He liked the idea of a long term commitment so he knew he wouldn't have to bother going back and forth to different companies and wasting time filing more forms. Nobody charged him for credit checks and they offered him a fuel advance on the pick-up of the load. Many companies offered a non-recourse factoring program that suited him just fine. Also he was happy to hear how much he was offered in terms of percentages on the freight bills. It was good money.

It was really refreshing dealing with the factoring people. They were more personable than those loan managers at the bank. It seemed as though those bank people spoke another language, but these factoring guys knew the trucking business and spoke to him like a client, not like a beggar for a handout. The factoring companies didn't worry over his credit and the debt troubles his father had had in the past of the company. Factoring was based on the credit of his customers and on their reliability which worked well for John because he and his father had built up good strong relationships over decades with their list of clients. So he knew they would understand when the factoring company contacted them for the invoices. His clients wouldn't think poorly of Thompson Trucking and the factoring companies appeared capable of handling the accounts receivable in the same polite manner that his father had used over the years.

John stepped out of his office to let his secretary know to expect the arrival of the factoring contract shortly. He felt exhilarated by the new possibilities that would make the future of the company fun again and put the stress of the difficult times behind him. With the capabilities of this new cash flow, John could actually expand Thompson Trucking Company further across the country and perhaps even go international into Canada. His heart felt full knowing his sons wouldn't have to worry about money because of the right decisions he had made for their trucking business.

If you need capital right now or are looking to expand then factoring is the way to go.

Maryland Factoring Company Articles

Invoice Factoring: Helping Temp Staffing Agencies Grow

When a temp agency is experiencing a cash flow problem, they generally have two options: the first option is to apply to a bank or other lender for a business loan, and the second is to use Invoice Factoring. In this article we'll take a look at why Invoice Factoring may be the best option.

Many companies who bill their clients have discovered that Invoice Factoring is a very effective way of addressing cash flow issues, and this is also true for temp staffing agencies. Typically, temp agencies don't get paid by their clients until such time as their job vacancy has been filled and the employee hired has actually commenced work, which means that it's very common for temp agencies to experience cash flow problems.

Any advertising required to successfully place job candidates is paid for by the temp staffing agency, meaning that they're not able to invoice their client until they've found a suitable candidate and the candidate has actually started work. So, the temp staffing agency must wait to get paid.

Why Invoice Factoring Works Well for Temp Staffing Agencies

Temp staffing agencies are typically paid per hour, with the amount due being based on the number of hours their placement has worked. Of course, during this time they still have to pay their own bills, and these might include rent, payroll, advertising costs, utilities, and so on. So, it's easy to see that this can put a big strain on a temp agency's cash flow.

Many expenses incurred by a temp staffing agency can't be put off, so the agency must be able to access cash straight away: their employees need to be paid on time, as do their rent and utility bills. All businesses require office supplies, so money must be available to keep the business running smoothly. In addition, temp agencies must have money on hand for advertising job openings. For all of these reasons, it's not either feasible or practical for a temp staffing agency to apply for a business loan, then sit, wait, and hope to be approved.

These businesses need money and they need it now; and that's why Invoice Factoring may be the perfect solution to their cash flow problem.

Explaining Invoice Factoring

When a business makes the decision to use Invoice Factoring in order to generate cash, their cash-flow problem can be resolved almost immediately. In many cases, the business can secure up to 92% of the value of their invoice within 24 hours! A word of caution though: if this is the first time the temp agency has worked with a factor it could take longer - somewhere between four and seven days.

Any temp staffing agency that's experiencing a cash flow crisis, or even agencies that only occasionally experience cash flow problems, should do as much research as they can to learn about factoring and how it might help their business grow. With this knowledge they can then consider Invoice Factoring as and when the need arises. Factoring really is the perfect way for a business to access cash money when it's most needed. In many cases, once a relationship has been established with the factor, the money will be delivered within 24 hours.

Cash When You Need It!

Of course one of the major bonuses of invoice factoring is that temp staffing agencies no longer need to worry about whether they will or won't qualify for a bank loan, because factoring will take care of their cash flow crisis. All they need to do is provide their chosen factor with the invoices they wish to sell, complete with the time-sheets for each employee, and the cash that's due and payable to them can be deposited into their bank account within 24 hours. Now, temp agencies will have no problems meeting their monthly obligations, and best of all, there'll be no need to take on new debt.

Maryland Factoring Company Articles

Why Do Companies Choose Factoring?

We know that factoring is the ideal way for a business to access instant cash on their company's receivables, but there are other important benefits as well. Factoring can be a very handy financial instrument for many businesses.

Listed below Are Six Key Benefits of Factoring

No. 1: Back Office Solutions

Anyone running a business knows just how time consuming and expensiveit can be collecting payments from customers. When you employ a factoring company they'll take over that role for you using their own collection specialists: it's their job to follow up with customers until such time as your account has been paid in full. In addition, some factoring companies use online accounts, which means that you'll have the ability to track your customers' payments in real time.

Handing this time consuming part of your business over to the factoring company frees up your time to do what you do best - running your business, looking for new business opportunities, and providing your customers with excellent customer service.

No. 2: Better Quality Customers

Some factoring companies have their own rating systems for companies involved in your industry, in addition to having access to credit data on companies that could well become your new customers, and days pay information. Others create their own rating systems for companies working in your industry, which allows you to make calculated, informed decisions about both existing and new customers.

No. 3: Instant Access to Cash

When a company provides goods or services on credit it usually has to wait somewhere between 30 and 90 days for customers to pay on their invoice, and this very often leads to cash flow problems for the business. And that's the beauty of factoring! When you use a factoring company you'll typically receive an advance on an invoice within 24 hours. This immediate injection of cash allows businesses to purchase additional equipment, employ new staff, and cover other business expenses.

No. 4: Growing Your Business

Because factoring provides instant access to cash, it offers you the flexibility to grow your business at a faster pace. In addition, factoring is very simple to set up. A factoring account can be created within a matter of days, whereas a traditional bank loan can take weeks. And, there's no limit to the amount of funding a factoring company can provide, unlike bank loans. Of course, this is assuming the factoring company you choose to work with has a strong capital structure. Over a period of time, the volume of factoring can increase within months - from thousands to millions of dollars.

No. 5: Funding for Start Ups

Start Ups quite often require financing to get their business up and running; but because they have no cash flow statements or balance sheets, and no business history, they're highly unlikely to qualify for cash flow or asset based lending.

Factoring is not concerned about these requirements because it's main interest is in the credit history of your customers. Before a factoring company offers you financial assistance it will examine your customers' credit scores, their payment patterns, and general financial health. Typically, the factoring company will not be interested in how long your company has been operating.

No. 6: Factoring Is Not a Debt

Factoring does not become a debt to your business because it's not a loan. Your business receives financial support from the factoring company as and when you accumulate invoices, and the matter is settled once your customers have paid in full. It's true that if you're utilizing recourse factoring, you, as the factoring client, assume the risk if your customers default on payment; however, factoring companies usually allow businesses to work off that amount by retaining a portion of reserve payments or future cash payments.

Maryland Factoring Company Articles

Factoring: An Overview

What Is Factoring?

'Factoring' is when a third party commercial finance company purchases the Invoices or Accounts Receivable from a business. The finance company concerned is called a 'Factor' and the transaction is known as 'Factoring'. Factoring is also known as 'Accounts Receivable Financing' because factoring occurs when a business needs to access cash quickly, quicker than if it had to wait the 30 to 60 days (or longer) to receive payment from a customer.

The majority of factoring companies purchase invoices and advance cash within 24 hours, although the terms and nature of factoring can differ between industries and different financial service providers. Depending on the industry, the customers' credit histories, and various other criteria, the advance rate can range from between 80% and 95%. The business also receives back office support from the factor. Once the factor has collected from the business's customers, the business will be paid the reserve balance of the invoices, less a nominated fee for assuming the collection risk.

The main benefit of factoring is that a business is not required to wait one or two months (sometimes more) for payment by a customer - the business will receive cash in hand to operate and grow their business. It's important to note that factoring is not a loan: there's no debt with factoring. Funding is unrestricted, which means that a business has more flexibility than borrowing from a bank.

The Five Simple Steps of Factoring

1. As a business, you provide a service to your customer;2. The invoice for this service is sent to a factoring company;3. On this invoice, you'll receive a cash advance from the factoring company;4. It's now up to the factoring company to collect full payment from your customer;5. Once payment has been received, you'll receive the balance of your invoice account from the factoring company - minus their fee.The Advantages of Factoring

There are many reasons why factoring has become a popular and valuable financial tool for businesses today. The key benefit of factoring is that a business receives a quick boost to its cash flow: in fact, many factoring companies offer cash on their Accounts Receivable within 24 hours! The factoring company takes responsibility for collecting customer payments, and may also evaluate the payment and credit histories of a business's customers.

Other Benefits Include:

' When a business needs access to cash, factoring can be customized and managed in order to provide the necessary capital;' The business balance sheet will not show this financing as a debt;' Factoring is not based on the company's credit or business history: it's based on the quality of its customers' credit;' Factoring is not determined by the company's net worth: it provides a Line of Credit based on sales;' There's no limit to the amount of financing through factoring, unlike a conventional loan;' Factoring is an ideal solution for start up businesses that often require immediate cash flow.

Is the Concept of Factoring New?

No, it's not! In fact, the origin of factoring comes from overseas trade among nations and dates back several centuries to the 1400s when it became part of doing business in England. In the year 1620 it arrived in America with the Pilgrims. Like other financial tools, factoring has improved and evolved over the years. It became an effective way of creating cash flow in the United States at a timewhen companies faced strict limitations when trying to secure loans in the country's damaged banking system.

Who Uses Factoring?

Factoring is available for companies of all sizes, ranging from a one person business to Fortune 500 companies. Every business can use factoring as an effective way of increasing their cash flow. In addition, factoring spans all types of industries, from transportation, trucking, textiles, manufacturing and distribution, staffing agencies, and oil and gas.

The cash generated from factoring is used by companies to purchase new equipment, pay for inventory, expand operations, add employees, and basically cover any expenses related to the running of their business. The beauty of factoring is that it allows companies to make quick decisions and to expand at a faster pace.

How Does Factoring Work?

For the purpose of this post, we'll describe a fictional example as a way of illustrating a common factoring situation.

XYZ Transport is a trucking company: their intention is to double their fleet size over the next two years in order to service more clients in the West. The company has just successfully won a new customer on the West Coast who requires freight to be shipped from Oklahoma to Los Angeles. This new customer is more than happy to pay for the service within 30 days; however, that won't cover all the immediate costs involved, like payroll, fuel, and maintenance costs of running the route.

This is a familiar situation for the owners of XYZ Transport: the lack of available cash flow in the past has prevented the company from accepting new business. So now XYZ Transport has turned to a factoring company: they have agreed to sell the West Coast customer's invoice to the factoring company in exchange for a 90% advance on the total amount - within 24 hours! This much needed influx of cash will replenish the trucking company's reserves and allow it to continue running the Oklahoma - Los Angeles route. In addition, XYZ Transport now has the added flexibility of taking on new customers.

How Much Do Companies Factor?

Each company has its own unique business needs, so somecompanies only factor invoices for customers that are slow in paying, whilst other companies factor all of their invoices. Companies can factor receivables ranging from a few thousand dollars right through to millions of dollars each month.

What's the Difference between Factoring and a Traditional Bank Loan?

Factoring, also known as Accounts Receivable Financing, is a quick, flexible and effective way for businesses to create a steady cash flow stream. See below for how factoring is different to a Line of Credit at a bank or a traditional business loan

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"How a Factoring Company Saved This Owner of a Trucking Company Business"

Transportation industry plays a vital role in the economic scene. As people's lives become more and more sophisticated as time goes by, making the most out of the limited resources is the concern of all. Say for example the proper use of land to get optimum profit and convenience or what is known as the zoning. It is defined as the process of planning for land use to allocate certain kinds of structures in certain areas. This method separates the manufacturing sites from the sources of its raw materials, the employees and employers to their respective offices. This made the transportation industry play a vital role in the economic scene. It is a primary necessity for businesses of any size and of any type. It does not just transport raw materials to the manufacturers but also bring finished products into our every door.

Investing in a business which plays a vital role in the current economic scene is a thing that every investor should not think twice about. But business does not work that easy. The big question is, how you are going to survive the most challenging phase of establishing a business - the start. Starting a business requires a capital. If you now have enough money for capital, you can now start your business and since you are investing in a very promising type of business, finding customers is not a problem. The problem is, what if you found bad ones. Even if your customers are also managing a business and expecting cashflow, which does not guarantee that they would pay you up to date because some businesses are just ill-managed. For the business to survive, the most important thing that you would be doing is funding your operational cost - make payrolls, fuel, maintenance - it should rely on cashflow, but since things like mentioned above is very common, some business owners would resort for a loan. But that does not solve the problem of getting your receivables paid on time. As a business owner, you cannot afford the time it takes to collect the receivables, while trying to make your business grow.

Mr. Paul, an owner of a small trucking company experienced the same kinds of problems and shared how he managed to survive. "I just released my head from the stress of how am I going to get my receivables, and focused on making the business grow"¦"

Mr. Paul just got his retirement fee from a big trucking company for almost forty years and was thinking on how to double his money in the shortest time possible. Seeing a small trucking company as a business of great potential and is a business that he knows. When he was still driving a truck, he was fascinated by how much money the company is making. He has also never experienced a delay in his salary. When he decided to invest his retirement fee in establishing a small trucking company, everything was just according to what he expected. He started with a single truck from his home. He started with just a few clients, the ones he knew already and never missed one deadline and kept freight damage as minimal as possible. Because of his outstanding services he started to get referrals and had more work than he can handle. From then, he started to expand, bought more trucks, hired more personnel. Using the knowledge he acquired from the company that he had served for a very long time, and dedication to his work, his little business grew in a rate that he had never imagined. The business is now requiring a more strategic plan and when Mr. Paul thought that everything was going very well, he encountered problems that he failed to foresee.

He had customers that made him wait for weeks or even months before paying. Since his little business is rapidly growing, his operational cost is also growing . This is a problem that he never knew and never observed in his entire career as a driver of a trucking company since he was never in an administration role. He was at the verge of breaking down, his business is losing money, growing too fast, not big enough has to rely cashflow to keep up to his fast growing business. He had to make his payroll, pay his suppliers, maintenance and fill his orders. Mr. Paul thought of going to bank and apply for a loan but was denied. "Maybe because I had a bad personal credit...haha"

Mr. Paul thought of declaring bankruptcy because of the stress that he never imagined he will be handling. He had to think of how to manage his business and at the same time, how will he keep the business alive by thinking of a solution on how is he going to deal with his receivables.

"You know that time, I, I, I just don't know what to do... I felt that as the business kept growing and growing, I become more and more incompetent. Then suddenly, a hero came along... Just at the nick of time. "

Then a close friend of his introduced him to a factoring company and everything turned out just fine. So what is this factoring company then? What does it do? How did it save Mr. Paul's business?

Well, this is how it works, Mr. Paul sells his invoices or receivables to a factoring company at a discount and not in an amount where he can no longer make a profit. The factoring company will then be the one collecting the invoices of Mr. Paul's business from his customers. Say for example, Paul still has 100 dollars to collect from one of his customers. He then sells it to the factoring company at a lesser price, say 90 dollars. The factoring company will now be the one who is going to get the 100 dollars collectible from Paul's customer.

The factoring company immediately gave Mr. Paul the cashflow he needed. He now has instant customer credit checks. He can rest well and likes doing business with companies that pay their bills on time. Save him from the stress of thinking how to deal with his collectibles, thus saving time and money. He can now focus on growing his business and keeping his customers happy. Increase his sales and cashflow.

The Factoring Company not just saved Mr. Paul's start-up business but made it a big company now. It has helped Mr. Paul's business, why don't you let it help yours?

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The Difference between Accounts Receivable Financing and Factoring

Today, it's not as easy for businesses to access finance as it was in past years, and more companies are being forced to look for alternative, non banking financing options in order to access the capital they require to help their business grow.

Two of the more popular tools available to cash strapped business owners are Accounts Receivable Financing (A/R Financing) and factoring. Some business owners believe these two are the same, but there are, in fact, some small yet significant differences.

What Is Factoring?

Factoring is when a commercial finance company, also known as a factor or factoring company, purchases a business's outstanding accounts receivable. At that time, the factor will typically advance the business somewhere between 70% and 90% of the invoice's value. Then, once the invoice is collected from the customer, the remaining balance - minus a factoring fee - is released to the business. The factoring fee could range from between 1.5% and 5.5%. It's calculated on the total face value of the invoice and depends on how many days the funds are in use and other aspects, like the collection risk.

When a business has a factoring contract they can usually choose which invoices they want to sell to the factor: it's not generally an all or nothing process. Once the factor has purchased an invoice they become responsible for managing the receivable until the account has been paid. Essentially, the factor becomes the business's accounts receivable department and credit manager, analyzing credit reports, performing credit checks, mailing invoices, and documenting payments.

What Is Accounts Receivable Financing?

Accounts Receivable Financing is more similar to a traditional bank loan, however there are some key differences. Bank loans are secured with collateral; which might be real estate, the business owner's personal assets, or plant and equipment; whereas Accounts Receivable Financing is backed by the business's assets related to the Accounts Receivable. When a business has an Accounts Receivable financing agreement, a borrowing base is established at each draw against which the business is able to borrow money: this would typically be between 70% and 90% of the qualified receivables.

Between 1% and 2% is typically charged as a collateral management fee against the outstanding amount, and interest is only calculated as and when the money is advanced. An invoice must be less than 90 days old in order to count towards the borrowing base, and the finance company must deem the business credit worthy. There may also be other conditions to fulfil.

So, you can see that there are many similarities between Accounts Receivable financing and factoring; however, one is the sale of an asset (receivables or invoices) to a third party, while the other is actually a loan. In many ways, though, they do act similarly. Below we've listed the main features of each so you can determine which would be the best fit for your company.

Accounts Receivable Financing

' Generally, Accounts Receivable Financing is not as expensive as factoring;' It can be easier to move from this type of financing to a traditional bank line of credit once a business becomes bankable again;' Typically, a minimum of $75,000 per month is required in sales to qualify, so this type of financing may not be available to small companies;' Due to the fact that the business will be required to submit all of its Accounts Receivable to the finance company, this type of financing can be less flexible than factoring.

Factoring

' It's quite easy to qualify for factoring, and factoring is the ideal solution for start ups and financially challenged companies;' Because businesses can decide which invoices they want to sell to the factor, factoring offers more flexibility than Accounts Receivable Financing;' The company is able to track total costs on an invoice by invoice basis because factoring has a simple and easy fee structure.

In Conclusion

Today we see both Accounts Receivable Financing and factoring as traditional sources of financing; effective when traditional bank financing is not an option. Factoring can carry a business through a period when an immediate cash input is required.

Somewhere between 12 and 24 months most companies are generally able to repair their financial situation and once again become bankable. However, some companies in certain industries continue factoring their invoices indefinitely.An example of this is the trucking industry, which relies heavily on factoring for cash flow injections.

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Invoice Factoring; The Best Way to Grow a Temp Staffing Agency

When temp agencies are struggling with cash flow problems they typically have two options; the first option is to apply for a business loan from a bank or other lender and hope they achieve a favorable result. Their second option is to use invoice factoring, so in this post we're going to discuss why invoice factoring could be their best choice.

Many businesses in many varied industries are discovering that invoice factoring is the ideal way of addressing cash flow issues, and this is also true for temp staffing agencies. In fact, it may be even more true for temp staffing agencies because these agencies don't receive payment from clients until such time as their job vacancy has been filled and the selected applicant has completed a period of work. It's not surprising, then, that temp staffing agencies often struggle with cash flow issues!

How Factoring Can Help Temp Staffing Agencies With Cash Flow

Temp staffing agencies are required to use their own finances to pay for the necessary advertising in order to place their job candidates. The client is only invoiced once the temp agency has located the perfect applicant and that person has actually worked, which can involve a long period of time before being paid. And when they are paid, they're often paid on a per-hour basis, determined by the number of hours the successful applicant has worked. In the meantime, the temp staffing agency still has its own financial obligations, like rent, payroll, advertising costs, office supplies, and so on. All these expenses must be paid by their due date, which can place an agency in a short-term (sometimes long-term) financial crisis.

Temp Staffing Agencies Must Meet Their Own Financial Responsibilities

Like any other business, temp staffing agencies can't postpone their own financial obligations, so they need access to money. Rent must be paid, utilities must be paid, and their employees need to be paid on a regular basis. All business offices require supplies and money must be available to advertise job openings, so it's understandable that waiting to be approved for a bank loan may not be a practical or even feasible option. These temp staffing agencies need access to money, and the sooner the better. That's why we suggest that invoice factoring may be the ideal solution for resolving a temp staffing agency's cash flow problem.

How Factoring Works for Temp Staffing Agencies

When any business decides to negotiate an invoice factoring program to generate instant cash, the business may, in many cases, secure up to 92% of the total value of their invoices within 24 hours! Note that if this is the first time the temp staffing agency has worked with a factor it could take between four and seven days to establish a factoring program. Either way, the agency's cash flow problems will be over, and they can proceed to conduct and grow their business.

Many temp staffing agencies are affected by cash flow problems, sometimes only occasionally, but we strongly suggest all agencies learn about factoring and how it works, just in case the need for immediate cash should arise. Invoice factoring has become a very popular financing option for many businesses, particularly those who need an urgent cash injection. Most times, money will be advanced within 24 hours once the agency has established a relationship with a factoring company.

Invoice Factoring is NOT a Loan!

Another bonus of invoice factoring is that it's not a loan. Basically, all the temp staffing agency is doing is accessing money that's already owed and payable to them. Factoring simply provides a means for the agency to access this money when it's most needed

Now, temp staffing agencies don't need to approach banks and other traditional lending authorities, hoping and praying they qualify for a loan. All that's required is for the agency to provide the factoring company with copies of the invoices they wish to sell, together with time sheets for each employee. Then, within 24 hours the agency will receive a cash deposit into their bank account. No more cash crisis! The temp staffing agency will now have funds to meet their regular financial obligations without the need to take on any further debt.

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Questions You Need to Ask Your Factoring Company

In today's marketplace we're seeing more and more factoring companies, and factoring fees, rates and agreement terms have become very competitive. This means that, as a potential factoring customer, this competitiveness should work to your advantage. However, there are some issues you must consider when choosing a factoring company to suit your specific requirements.

Before entering into any factoring agreement, here are some important questions you should ask -

What Are Your Terms?

As a factoring customer, you'll be looking for as much flexibility in your factoring agreement as possible. It may be that you choose a long term contract with your factoring company if it includes flexible rates or a price break. In today's competitive market, many factoring companies are agreeing to adjust their rates based on competitive offers from other factors or increased factoring volume.

The majority of factoring agreements are a one year contract, which appears to be industry standard, and this contract will renew automatically unless you provide the factoring company either 60 or 90 days notice.

What's Your Fee Structure?

The fee structure may vary depending on both the factoring company involved and your industry. Some factoring companies charge a flat fee, which is calculated as a percentage of the total value of the invoice. On the other hand, other factoring companies charge additional fees to cover costs associated with doing business, such as money transfers, software, and so on. Ensure that the factoring company you're considering working with is completely upfront and transparent with you about its terms and fees.

Are You Able to Offer Both Recourse and Non Recourse Factoring?

Recourse factoring:

Recourse factoring is less expensive than non recourse factoring. With recourse factoring, you (being the client) are ultimately responsible if the factoring company is unable to collect on your customers' invoices. However, you're not necessarily required to pay the debt out of pocket if you have a recourse agreement and the customer defaults on payment. It may be that the factoring company will withhold a portion of future cash payments or payments held in reserve, with the money being placed in an escrow account until such time as the debt has been paid.

Non recourse factoring:

When you have a non recourse factoring agreement, the credit risk for the collection of customers' invoices lies with the factoring company.Therefore, we believe it's to your advantage to use a factoring company that offers both recourse and non recourse factoring, simply because you may find that some of your customers are more suitable for recourse factoring than others. In addition, you need a factoring company with a strong credit team because they can work with you to ensure you're dealing with good customers: to a certain degree this will relieve some of the pressure of being responsible for bad debt.

How Long Has the Factoring Company Been in Business?

With the marketplace becoming increasingly competitive, today we're seeing the creation of more and more factoring companies. However, many of these companies are recent start ups, with limited industry experience. Make sure you research the factoring company's history prior to entering into any factoring agreement: also research its background into providing financial services in your specific industry.

Do You Have the Capital to Grow with Me?

The fact that there's no limit to the level of financing is the major advantage factoring has over traditional bank lending. As your company continues to grow, so too should the funding of invoices grow with you. Do your research and learn as much as possible about your potential factoring company's client base and their capital structure.

Does this factoring company have a limit to the number of debtors it takes on? What's a typical account size? What's the factoring volume of their largest client? You'll probably find that factoring companies who have been serving your industry for many years will have greater capacity to finance your company as it continues to grow.

Is There Anything Else You Can Do for Me?

Obviously, factoring is more expensive than a conventional bank loan, and this is partly due to the back office services that your factoring company is able to provide. Besides collections and financing, many factoring companies will evaluate companies in your industry and provide credit information. Therefore, when looking for a factoring company for your business, make sure the one you choose offers additional services and products that can assist you in making good business decisions.

How Do We Start Factoring?

Fortunately, factoring companies are not unduly concerned about your balance sheet before they decide to work with you, unlike banks. However, they do have a process to follow when selecting new clients, so be sure you understand what the factoring company is looking for when it's considering you as a client. Are they looking at your credit ratings and/or your customers' payment histories?

Are they looking at your personal credit score?

In many cases a company will start factoring because it's looking for a quick injection of cash, so you need to know how many days the factoring company will take to review and process your application.

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Freight Bill Factoring: The Best Way to Achieve Your Business Goals

Freight bill factoring is not a secret, but many businesses are still unaware of the benefits available to them by factoring their business invoices.

If you're planning on starting your own trucking business, or perhaps you already own a trucking business, you may well have heard of freight bill factoring. Many trucking companies confirm that freight bill factoring has been entirely responsible for helping them achieve their overall business goals. So, let's discuss freight bill factoring and how can it help you grow your business.

How Freight Bill Factoring Assists Trucking Companies

It was recently reported that freight bill factoring has become the financial backbone of the trucking industry, and that's not a surprising statement because factoring provides financing capital that businesses would not otherwise be able to access. The freight bill factoring process is a very simple one: your Bill of Ladings is purchased by a factoring company at a discounted rate. The trucking company receives immediate funds and, because the money received is not a loan, the trucking company is free to use these funds as they see fit. No more cash flow problems!

Is Freight Bill Factoring a New Financing Concept?

No, it's not new. In fact, freight bill factoring has been around for a long, long time. Almost every civilization engaged in commerce has used some type of factoring. Businesses actively engaged in factoring during North America's colonial period when they made cash advances against accounts receivables to enable the business to carry on with their commercial operations. Of course, factoring has become quite advanced over the years and is now more focused on financial management, collections, and credit worthiness; however, the basic idea of purchasing accounts receivables remains the same today.

Today, factoring companies have a lot more to offer than just funding: they now have factoring specialists who assist their clients by evaluating their customer's credit worthiness, defining credit limits, and managing their accounts receivables collections in a professional manner.

Right across North America we're seeing all forms of factoring companies servicing business sectors and industries of all types. It's interesting to note that, today, many large financial corporations have their own in-house factoring divisions; however, factoring companies are typically independently-owned enterprises.

Commercial Banks Are No Longer Supportive of Small Business

Commercial banks today are operating under very strict regulations with constantly changing lending criteria, thus making it very difficult for business owners to apply for and be accepted for a bank loan. Their inflexibility has left small and medium-sized businesses out on a limb, searching for alternative financing sources. Fortunately, factoring provides these businesses with the financing solutions they're looking for.

Freight bill factoring offers a workable solution for these businesses when conventional financing methods are simply not available. And now that banks and other lending institutions have become less friendly to small business owners, factoring as a financing remedy is looking much more attractive.

Interesting statistics show that the volume of factoring around the globe has now exceeded the trillion-dollar mark, with factoring companies operating right around the world. In the last four years alone, there's been an increase in factoring transactions by 60%.

Factoring companies provide businesses with the working capital they need to operate and grow their businesses and, because factoring is not a loan, there really are no disadvantages to factoring.

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How Factoring Saved A Staffing Agency

The Bellosa Temporary & Permanent Hiring Agency has been experiencing a major uptick in business since the unemployment crisis began. The unemployed and underemployed workers have been keeping the phones ringing. The staffing agency is also fielding a lot of calls from employers too, looking for just the right hire. Company President and Vice President, Laurie Bell and Ted Stevens, have not experienced a boom in business since they first opened the doors in 2009, during the recession. They had an idea then that this would be a profitable venture.

The mantra that Laurie and Ted live by is that there's always going to be people searching for work and of course employers will always be on the lookout for good workers. This is especially true in healthcare staffing, the industry they specialize in. This seemed to be a safe bet for them as they embarked on this venture, but with any small business, the only way to keep the doors open is to keep pressing forward and out perform the competition.

In a relatively short period of time Laurie and Ted had built a nice sized business, they were able to hit the ground running with some brilliant marketing programs and a number of contracts from insiders. They grew rapidly, the timing couldn't have been better and they were very lucky in this aspect. By the fall of 2011 Laurie and Ted had weathered some ups and downs but they did have some solid clients like a few big insurance companies and a university hospital close by. These clients always paid their invoices on time. But they did start to notice a decrease in accounts receivables from some smaller clients such as rehab centers and private practices.

As winter approached they recalled previous winters and holiday seasons and realized that accounts receivables usually did slow down during this time. Laurie and Ted made the decision to delay their late payments until after the New Year. This plan didn't really appeal to them as it's no way to start a New Year, but they seemed to have no other options.

When New Year's had come and gone they realized that their Accounts Receivables had gone from 30 days past due to 60 days past due. Before meeting with their accountant Scott, they'd decided something had to be done, but they didn't know what.

Sitting in the conference room with Scott they listened as pulled all the figures up on his iPad saying,"Okay you two, I've been looking over the files you sent over and I can certainly see why you're worried about your late A/Rs but there may be a way to fix this. Do either of you know what factoring is?" Scott inquired.

Laurie and Ted looked at each other quizzically, and then Laurie said "I think it rings a bell, but I'm not really sure. Can you explain it?"

Scott began laying out the details, "You are sitting on a pile of invoices that are past due. The more time that goes by without them being paid, the bigger the bind this puts your business in. It makes it very difficult for you to grow, much less hire anyone new. If you don't have enough cash coming in . "

Ted interrupted with, "Then it could make it difficult to take on any new business because we wouldn't be able to hire the additional personnel we need and meet our weekly payroll. We need an inflow of cash and we really can't wait. If we have to wait any longer on these invoices we'll be in trouble."

Scott jumped in saying, "And this is precisely why I wanted to discuss factoring with you. The factoring company will purchase the invoices you are sitting on that are up to 3 months late, which gives you the cash you need now." He then showed him a chart on a piece of paper he placed in front of them.

Laurie began to carefully scrutinize it asking, "Is this the fee schedule?"

Scott answered, "Yes it's all right there. The factoring company makes 1% to 3% of the total amount of each invoice they purchase."

"That's sounds like a good deal to me", Ted said.

The three of them sat there and talked this over for a while and then Laurie and Ted made the decision to go forward realizing this was the best way to keep them afloat. They knew if they couldn't accommodate all the new clients they were acquiring the competition would get them and they would go down, they could just not afford to turn any business away.

They now needed to fill out an application and submit it to the factoring company and they also needed to show them a few back invoices, undergo a credit check for their company. Credit checks would also need to be done on the companies owing the debts that the factoring company would be purchasing.

It didn't take long for Bellosa's credit to be approved and the creditors' as well. Before long the factoring company purchased the overdue invoices and Laurie and Ted got the influx of cash they needed to cover things and allow them to continue growing their business.

The next time Laurie and Ted met with their accountant Scott, there were smiles all around.Scott said, "I've taken a look at your books so I know that factoring was the right solution for you."

"It worked perfectly", Laurie stated and went on to say, "The tiny amount we paid out for this influx of cash was certainly worth it."

Ted chimed in with, "Without a doubt! Whatever the fees were we made back and more since we were now able to hire more personnel so we could take on more business. It worked out for us and for them I would say!"

"That's what's great about factoring!" Scott exclaimed with a look of satisfaction on his face.

Maryland Factoring Company Articles

Many healthcare professionals will attest to the fact that qualifying for a business loan or commercial line of credit is becoming harder and harder. Fortunately, there is a viable option, and it's known as Medical Factoring. Medical factoring is available for all types of healthcare businesses, including medical practices, and is the ideal financing option for businesses experiencing cash flow problems.

The Challenges Faced by the Healthcare Industry

Generally, the healthcare industry has excellent growth prospects and is quite resilient to economic turbulence, but it's also an industry facing more financial challenges than ever before. In years gone by, healthcare professionals, medical facilities, and medical suppliers found it reasonably easy to manage their cash flow, but today Medicaid, Medicare, and private insurance companies have laid down strict guidelines for reimbursement, including onerous documentation and billing requirements, so-much-so that businesses not only receive less money, but must wait longer to receive it.

This situation can, and does, create financial issues for many medical providers who, while dealing with increasing operating expenses, salaries, and benefits, must also accept less and wait longer to receive their money. In many cases, the health provider's long-term viability is placed in jeopardy, and because of cash flow problems the business is unable to pursue new opportunities for growth. A physician running a relatively small practice could well have $1 million tied up in receivables!

The Problem with Bank Loans

When any business confronts a cash flow crisis their first port of call is usually a bank or other commercial lender, and a Line of Credit or business loan can certainly help in the short term; however, neither will permanently solve the problem and are therefore not optimal financing solutions. Bank loans are more suited to large fixed capital purchases, but they're not designed to cover short-term recurring business expenses. On the other hand, a Line of Credit is somewhat better, but because they have credit limits and fixed terms they're not able to provide the assurance a business needs of an unlimited, renewable source of business capital. Once the credit limit has been reached or the term of credit line ends, the lender has the right to not renew or increase the credit limit. And, unfortunately, this is the situation that many healthcare professionals find themselves in today.

The Perfect Medical Financing Solution

So, what's the ideal solution for medical financing? The perfect solution would be one that's flexible enough to grow and expand with the healthcare business; one where the business owner is not required to re-apply to a bank or other lender for credit limit increases. The ideal solution would provide a reliable and steady source of working capital, capable of financing both the current and future operations of the business.

Medical Factoring

Fortunately, there is a solution for healthcare professionals, and it's known as Medical Factoring. Medical Factoring, or Medical Receivables Factoring is an area of receivables factoring that deals exclusively with accounts that are medical in nature. Due to the fact that many healthcare receivables are either reduced or denied by insurance providers, and because of the expertise required to manage the claims process, factoring companies who factor medical receivables face significant challenges, so-much-so that it's almost a necessity for these companies to specialize in medical factoring. In fact, there are many factoring companies out there that do nothing else!

What Types of Business Use Medical Factoring?

Factoring has been around for hundreds of years and many industries have discovered the benefits of invoice factoring. However, many medical service providers are completely unaware of the existence of factoring and therefore don't realize that it's one of the most flexible and powerful business financing tools available today. Almost any healthcare provider can benefit from Medical Factoring, including -

Receivables Factoring offers medical practices an excellent financing alternative to loans: the medical practice will have consistent and flexible financing tied directly to its insurance claims. This means that the amount of available financing increases as more claims are filed. Having a reliable cash flow in a growing medical practice ensures that there will always be sufficient liquid business capital to cover expenses.

Medical Supply Companies

In the same way, medical factoring offers medical supply companies quick and predictable business financing, directly tied to the volume of sales. The amount of financing grows as sales grow, automatically providing the working capital needed to both operate and grow the business.

Generally, medical factoring is particularly well suited for smaller medical offices. Because your chosen factoring company will be handling most of the administrative work involved in collections and claims processing, overhead expenses and office staffing can be kept at a minimum, thus allowing you to focus on what you do best - delivering the best medical care possible!

If you have a small practice with good growth prospects, but you also have slow cash flow, then you'll soon discover that medical factoring could well be the ideal financing tool to help you finance the growth of your business. It's true that most factoring companies have minimums, but there are factoring companies out there who will finance an office billing as little as $50,000 per month.

How Medical Receivables Factoring Works

Medical Factoring is quite simple: Basically, medical factoring accelerates payments for any healthcare business that depends on third-party payors. This means that within days of the initial billing (instead of weeks) most of the business's billed amount will be deposited directly into that business's bank account, thus drastically shortening the collection cycle and eliminating the constant headache of cash flow problems.

The added bonus of medical factoring is that it's not a loan, and as such, has no impact whatsoever on the business's balance sheet. There are no arbitrary limits, no credit limits, and no stringent financial requirements. The healthcare professional can factor as much of the billing as is generated by the business, thus making factoring the ideal financing tool for business growth.

How to Create a Factoring Program

Setting up a factoring program will typically take a couple of weeks at most. Obviously, the factoring company will need reassurance that the third-party payors are reliable and that their clients' practices are stable. However, once the factoring program has been established, medical financing is predictable and continuous. Claims will typically be funded within 48 hours after being submitted to the medical factoring company.

The Factoring Process

Medical Factoring is a very simple process -

- Periodically, your practice submits billings to Medicare, Medicaid, and insurance companies (note that certain medical factoring companies will do this for you), with copies forwarded to your factoring company; - Within 48 hoursthe advance, or up to 85% of net collectables, will be deposited into your business bank account. The balance will be held in reserve to settle billing discrepancies; - The factoring fee will be collected once a factoring company has been paid, with the balance of the billings being remitted to you. The fee charged by the medical factoring company will vary according to the size and types of claims generated by the practice.

The Future of Medical Factoring

It's true that medical factoring covers a relatively small portion of factoring activity overall; however, more healthcare professionals are learning about factoring and, today, we're seeing an increase in interest in medical factoring throughout the healthcare industry. As the benefits of this type of medical financing become more widely known, it's anticipated that medical receivables factoring will become more widely used.

Medical factoring provides a short-term solution for shortfalls in working capital financing, plus a long-term solution for medical financing and patient accounting support, and it's for these reasons that medical factoring as a financing tool deserves careful consideration by healthcare businesses.